ARIZONA STATE SENATE
Phoenix, Arizona
sales tax; contractor’s
solar exemption
Purpose
Contains a Proposition 108
clause. Creates a transaction privilege
tax (TPT) exemption for prime contractors for the installation of solar energy
devices.
Background
In 1991, the Arizona
Legislature enacted two transaction privilege tax exemptions applicable to
solar energy devices. One was for sales
of such devices under the retail classification, and the other was for the
contractor’s cost of the device installed under the prime contracting
classification. At the time the
exemptions were added, both exemptions were set to expire on December 31, 1996. However, the exemption under the retail
classification was later amended to delete the expiration clause. In 2000, the Legislature reinserted the
exemption for prime contractors and made the exemption applicable retroactively
to January 1, 1997 (Laws 2000, Chapter 214).
The exemption was to expire on January 1, 2011.
S.B. 1336 amends the
existing prime contracting TPT exemption for solar energy devices to include
the cost of the installation of the solar energy device. It allows the contractor to deduct not only
the cost of the device but the installation proceeds, including the amount a
contractor might charge the customer up to a $5,000 deduction per contract
until January 1, 2003.
According to representatives
of the Arizona solar industry and the Arizona Department of Revenue, S.B. 1336
eliminates contractors’ TPT liability in cases where statutes were
misinterpreted and ensures that no contractor is assessed for taxes improperly
reported since January 1, 1997.
A fiscal note has been
requested from Joint Legislative Budget Committee staff, but has not yet been
received.
Provisions
1. Requires, for the tax period January 1, 1997 to December 31, 2002, a prime contractor to deduct the gross proceeds of sales or gross income derived from a contract to provide and install a solar energy device before computing prime contracting classification tax base.
2. Makes a conforming change.
3. Becomes effective on signature of the Governor.
Prepared by Senate Staff
February 5, 2002